Labour can win the welfare argument by appealing to working families hammered by the cuts, Liam Byrne tells Rafael Behr.

Labour lost crucial votes at the 2010 general election because it had presided over a welfare system that too many people thought offered rewards for idleness. So it is hardly surprising that George Osborne has made benefit cuts the centrepiece of his austerity plans. Targeting the welfare bill has the double appeal of being popular and foisting a dilemma on the opposition. If Ed Miliband acquiesces to an unpicking of the safety net, his party cries treason. If he defends the status quo, he invites Tory accusations of deficit denial and softness on scrounging. The received wisdom in Westminster is that this trap is one of Osborne’s most cunning manoeuvres.

So I am surprised to hear Liam Byrne declare that welfare will be his party’s ticket back to power. “Labour will win on social security,” he tells me over tea in his parliamentary office.

Byrne is not short of confidence. Among officials in the last government he was a notorious swaggerer – fastidious and unafraid of making enemies. It has fallen to him, as shadow work and pensions secretary, to tell the party things it might not want to hear. Does it bother him, I wonder, being a hate figure for some on the left? “Social security politics is always complicated in the Labour Party,” he concedes with a strained laugh. “It’s complicated now because we have a moral obligation to scream and shout to protect the people who are being hurt by this government. At the same time we have to bring forward a plan for renewing social security that is strong on the responsibility to work.”

So, how does welfare go from being an electoral liability for Labour to an advantage? Byrne’s premise is that the government is failing even on its own terms. It is not reducing the benefits bill or the deficit. When voters grasp the scale of that failure, they will be all the more appalled by the social consequences of the illtargeted and politically motivated cuts.

“The Tories have crossed the threshold of decency,” Byrne says. “They’re very good at conjuring up another vulnerable group to kick the crap out of, but we’ve got to say, ‘Look at the numbers.’ The welfare bill has gone up by £20bn and the way they’re paying for that is taking money off working people. They’re taking £14.6bn of people’s tax credits.”

That is a pivotal argument. The welfare debate in Britain has so far focused on cuts to unemployment benefits and on reforms aimed at encouraging the jobless back into work – the Universal Credit and the Work Programme. That has enabled the government to claim that it sides with working people against slackers. Byrne believes that story will unravel next year when cuts to tax credits and child benefit will heap more pressure on already squeezed low-income families, while those flagship policies aimed at helping the long-term unemployed will run aground. “It’s not Britain’s shirkers who are having to pay the cost of failure, it’s Britain’s strivers,” he says. “The Tories are screwing Britain’s strivers.”

That phrase is a deliberate raid on the Tories’ campaign lexicon. No 10 strategists have identified “strivers” as a key target group – the working-class and lower-middle-class “aspirational” voters who once flocked to Margaret Thatcher’s banner but question whether David Cameron is on their side. The impact of coalition policy on that swing segment will, Byrne says, give Labour an audience on welfare again. “As working people feel the kicking they’re going to get next year and as they see the way our country becomes divided, they’re going to recoil,” he says. “It will remind them of the things they rejected about the Tories in 1997.”

Won’t the public then also want to know what Labour would do differently, given that the budget constraints would be much the same? Byrne, like every shadow minister I speak to, turns vague on the topic of specific cuts. He talks in broad terms about spending less on housing benefit and more on social housing; less on unemployment benefit, more on childcare and social care. The theory is that limited resources should be diverted to help people find work and stay in it. Providing training or help looking after children and elderly parents will be the key to winning consent for a rejuvenated welfare system. Benefits must be designed around the needs of working families, which “feel that they’ve put a lot of money in and don’t get the things back out that they need”.

As for financial viability, Byrne looks to a neglected lesson of the postwar settlement. “If you look at Labour’s 1945 manifesto, two ideas are brought together: we want social security for a rainy day, but it comes with a commitment to full employment, which is what we’re going to need to pay for it.” Achieving that rebalancing will require stating some “hard-edged” facts, warns Byrne. For example? “You’ve got a responsibility to work if you can and if you don’t work, we’ll stop your benefits – it’s as simple as that.”

This kind of comment makes some Labour members wince. It is also something former Labour voters want to hear. Byrne thinks that there is a way through the dilemma. It involves “shouting from the rooftops” about injustices perpetrated by the coalition, while building an alternative offer based on an understanding of what hard-pressed families really want from a social security system. He is sure it’s a winning strategy. But he has to persuade his party of that if he is to convince a sceptical public.